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Are home warranties a good investment?

As a homeowner, you have to be aware of some of the common expenses that come with owning a house. Of course, there’s mortgage, taxes, utility bills or maybe a homeowners insurance. But there is one more optional thing: a home warranty.

So what’s a home warranty good for? Basically, a home warranty can help you reduce the costs to repair or replace something in your house that broke down or something else that doesn’t work properly anymore. Here’s what you need to know in order to find out if home warranties are a waste of money or not:

Home Warranty Vs. Homeowners Insurance

This is a common mistake that people make, thinking that a home warranty is the same thing as a homeowners insurance. They both offer protection against certain damages to your home, but there’s a difference between them:

First of all, homeowners insurance is the type of coverage that protects your house if it has been damaged by a calamity like fire, winds, rain or lightning. One such insurance does not cover your costs in case you have to fix your furnace, for example.

Second of all, a home warranty only helps you pay for repairing or replacing certain parts of your home, such as your furnace, boiler or your electrical infrastructure. But in case of a natural disaster, the warranty won’t help you.

Sometimes It’s Worth It

Sometimes, paying for home warranty might be worth it. Most cases, that happens when fixing the damage that’s been done to your home costs more than the annual warranty. The home warranty is especially recommended for those owning older appliances, that are more likely to be damaged.

One benefit when it comes to home warranties, is that it makes things way less stressful for you in case something in your house doesn’t work anymore. All you’ll have to do is to call your warranty provider and explain what’s the damage. After that, they will take care of everything else, having a repair person coming over to your house being covered under your plan too.

Sometimes It’s Not Worth It

The worst thing about home warranties is that they do not cover everything in the house. Sometimes, maybe the thing that you need the most to be repaired won’t be covered by your plan. Most people find that very annoying, given the fact that they pay an annual fee for the warranty and they expect to be able to use it when something in the house doesn’t work anymore. If you think about making one such purchase, be aware of the fact that there’s a strong chance that it doesn’t cover the costs when it comes to taking care of chimney problems, roofs or underground plumbing.

Of course, paying for home warranty is not the most expensive thing in the world, but sometimes, if you never get around to using it, it can be a waste of money. One thing you can do in order to avoid waste (and this is especially recommended to those owning a newer house equipped with newer appliances), is to save money on your own that you can use just in case of any damage that might happen.

Find the Right Company

One thing that people forget about before purchasing a home warranty is to do some research. This is a crucial part of the entire process, because there are many companies out there that are notorious for balking at service.

Look up the best companies and read lots of reviews. If there are a lot of negative comments on the services provided by a certain company, you might want to skip it, because if you choose it you might end up wasting money with this purchase.

As mentioned above, sometimes it’s worth it to have a home warranty, but you have to be careful when choosing the company that provides you the service. Doing some research can really be helpful and can ensure that the policy you buy is worth the money.

Overall, home warranties are a tricky investment. You either are in the situation of having something that broke down in your house and you can pay for the repairs by using the warranty, or you can end up paying an annual fee over and over again and never get to benefit from it. But most of the times, you will end up using it because appliances constantly break down after using them for a few years.